If you invest $6,000 in a Euro bond for 1 year paying 5% interest. At the time the investor bought the Euro bond, the exchange rate was $1.00 per Euro.
A) If 1 year later you convert the maturity value of the investment in Euro to US dollars, the exchange rate was $1.02 per Euro, compute the effective yield in US dollar terms.
B) If 1 year later you convert the maturity value of the investment in Euro to US dollars, the exchange rate was $0.95 per Euro, compute the efective yeild in US dollar terms.